02/06/2020 - Protecting Consumers or Allowing Consumer Abuse? A Semi-Annual R... - (EventID=110457)

Connect with the House Financial Services Committee

Thursday, February 06, 2020 (10:00 AM) -- Protecting Consumers or Allowing Consumer Abuse? A Semi-Annual Review of the Consumer Financial Protection Bureau.
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This will be a single hearing with the following witness:

● The Honorable Kathy Kraninger, Director, Consumer Financial Protection Bureau
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Purpose

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (DoddFrank Act), the Director of the Consumer Financial Protection Bureau (Consumer Bureau or CFPB) is
required to testify before the Committee at semi-annual hearings regarding a report the Consumer Bureau must submit to the Committee.

In response to the 2007-2009 financial crisis caused in part by a period of unchecked and rampant
predatory lending, Congress determined it was necessary to create a strong and independent federal agency with the ability to better protect consumers from unfair, deceptive, or abusive acts or practices in the financial marketplace. Title X of the Dodd-Frank Act created the Consumer Bureau as an independent agency within the Federal Reserve System, led by a single director. In establishing the Consumer Bureau, Congress explicitly laid out in statute various mandates and outlined the agency’s purpose, objectives, and functions. For example, the Dodd-Frank Act states that the Consumer Bureau, “shall seek to implement and, where applicable, enforce Federal consumer financial law consistently for the purpose of ensuring that all consumers have access to markets for consumer financial products and services and that markets for consumer financial products and services are fair, transparent, and competitive.”

Since opening its doors in 2011, the Consumer Bureau has investigated and uncovered egregious
and illegal conduct in the financial marketplace, including discriminatory and predatory products and services offered to consumers. The agency has received over 2 million consumer complaints with a 97 percent timely response rate by financial firms to those complaints. The Consumer Bureau has returned more than $13 billion to over 35 million consumers that were harmed by bad actors. This includes at least $130 million in relief for servicemembers, veterans and their families harmed by illegal practices through CFPB enforcement actions.

Consumer Complaints. The most recent Semi-Annual report notes 321,200 consumer complaints for the April 2019-September 2019 period. The report also notes that 82 percent of these complaints were received via the Bureau website, 5 percent via phone calls, 8 percent via referrals from other state and federal agencies, and the remainder via mail, email, or fax. The Consumer Bureau estimated that about 97 percent of the complaints it sent to companies received a response. Additionally, the Consumer Bureau highlighted that the most complained about consumer financial products and services were credit or consumer reporting (39 percent of all complaints), debt collection (24 percent), and mortgages (9 percent). According to a May 2019 analysis of the CFPB’s consumer complaint database since its creation in 2011, more than 223,000 complaints resulted in relief for consumers, including more than 75,000 who received monetary relief from the companies they complained about. Furthermore, Director Kraninger recently announced her intent to keep the consumer complaint database public, though with
some modifications. One such modification includes incorporating more educational resources into the process before a consumer a complaint is submitted.

Litigation regarding the CFPB’s Independence. To promote the independence for the agency similar to other federal regulators, Dodd-Frank provided that the Director of the Consumer Bureau may be removed by the President only for “inefficiency, neglect of duty, or malfeasance in office.” The CFPB had previously defended this provision in prior litigation, with federal courts having ruled that the for-cause removal protection was constitutional. On September 17, 2019, Director Kraninger notified the Speaker of the House Nancy Pelosi that the CFPB would no longer defend the constitutionality of its structure in Seila Law LLC v. Consumer Financial Protection Bureau (9th Cir. 2019). On October 18, 2019, the Supreme Court agreed to hear the case. The U.S. House of Representatives and other parties have filed amicus briefs in the case.